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Gold Retreats From $1,700 As Investors Take Profits, Cover Margins

March 9, 2020 at 17:31 by Andrew Moran

Gold futures are retreating from $1,700 toward the end of the Monday trading session as investors take profits and cover their margin accounts. Amid the intense market crash to kick off the trading week, the yellow metal has been one of the few stable options for market participants. Will gold return to spikes during the rest of the trading week?

April gold futures dipped $2.10, or 0.1%, to $1,670.20 per ounce at 17:11 GMT on Monday on the Comex division of the New York Mercantile Exchange. Gold had topped $1,700 earlier in the session before paring its gains. Last week, the precious metal rose more than 5%, lifting its year-to-date increase to more than 10%.

Silver, the sister commodity to gold, is sliding at the start of the trading week. May silver futures plunged $0.29, or 1.7%, to $16.975 an ounce. The white metal posted a weekly gain of about 3% last week, but it is still down about 5% so far this year.

Gold could not take full advantage of Black Monday as financial markets cratered due to fears over the coronavirus and a global oil price war. These concerns led to the Dow Jones falling more than 1,600 points, the S&P 500 slumping 5.8%, and the Nasdaq Composite Index shedding 5%. Asian and European markets also settled a lot lower on Monday.

There are potentially two explanations for gold’s lack of momentum during the market crash. The first is that investors sold on higher profits, especially with the metal trading at its best level in more than seven years. The second is that there was likely an influx of margin calls in other assets, which led to a liquidation in gold – the same thing happened on Friday.

A sliding US dollar capped gold’s descent as the greenback tumbled 1.08% to 94.92, from an opening of 96.11. A weaker buck is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.

The coronavirus continues to wreak havoc on financial markets as the death toll nears 4,000 and global confirmed cases exceed 111,000. A potential crude oil price war is also creating consternation as Saudi Arabia announced deep discounts to its official selling prices for April, and the country could raise output levels to more than 10 million barrels per day (bpd).

In other metal markets, May copper futures declined $0.0525, or 2.05%, to $2.51 per pound. April platinum futures plummeted $34.40, or 3.84%, to $862.00 an ounce. April palladium futures cratered $31.30, or 1.28%, to $2,407.89 per ounce.

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